Bookkeeping or any type of financial record keeping might not sound like the most exciting of tasks, but it is one which is so vitally important to the effective running of your business. If you put this task at the bottom of your priority pile, you’re going to end up in a bit of a messy situation.
Whether you decide to do it yourself or you outsource it to a professional, bookkeeping is a vital part of a business to keep it thriving and growing. If you need a little more persuasion on just how important bookkeeping is in general, let’s explore the consequences and problems of not making your financial record keeping a priority.
Lack of Up to Date Information
Without your records being up to date and easy to obtain, you have no idea how well your company is doing financially. This means you have no idea how close or far away you are to your aims and goals, and you could also commit to costly opportunities which you think you can afford, but in reality, you can’t.
Stress and Anxiety
If your books aren’t up to date, you will constantly be worrying about getting into trouble with the CRA. You could be audited at any time if the CRA thinks that your books aren’t kept in a high quality manner, and if they find that these haven’t been filed correctly, you could be in for very hefty fines indeed. Backdated taxes could cripple your business, and then success won’t even be something you’ll be thinking about, survival will be.
Borrowing Options May be Limited
If you are looking to borrow money to invest in your business, you’re going to struggle to find anyone willing to lend you the cash without having up to date and accurate records to look at. If your books aren’t presented in the correct manner, and if you can’t answer any on the spot questions about your finances, you’re likely to get a ‘no’ to your borrowing efforts.
Last Minute Accounting is Costly
If the end of the tax year is looming, you’ll suddenly kick into gear and try to get your records up to date. This is going to cost you more than if you did it in the correct manner throughout the year. An accountant or bookkeeper is likely to charge you more for last minute tasks, and this will be a costly mistake.
Missed Payments are Very Likely
If you don't have a clear picture of your financial situation, because of poor record keeping, you’re very likely to miss payments on certain items, or you might overstretch yourself and find that you really can’t afford the contract you’ve signed up to. Mistakes such as this, not only cost a large amount of cash, but they also put your reputation in jeopardy.
Don’t make these mistakes, make bookkeeping a priority and find the best accounting method for your business. By doing this in good time, you will eliminate all these possibilities, and sleep much better at night!
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- Written by: Jag Bath